Judge prohibits IRS from sharing sensitive taxpayer data with ICE to aid its immigration crackdown

A federal judge on Friday prohibited the Internal Revenue Service from sharing sensitive taxpayer data with ICE to aid its nationwide immigration crackdown.

U.S. District Judge Colleen Kollar-Kotelly issued an injunction that bars the IRS from passing along the sensitive information - including home addresses - to aid in civil immigration enforcement, concluding the policy was arbitrary and violates a law that protects taxpayer confidentiality.

"Plaintiffs' members face an imminent risk that the confidential address information they have provided to the IRS will be impermissibly used by ICE for civil immigration enforcement," Judge Kollar-Kotelly wrote.

A coalition of small businesses and unions sued to stop the controversial policy, which marked a significant departure from the IRS's earlier approach of strict confidentiality. In April, IRS agreed to begin sharing confidential information about taxpayer's addresses, and by August, the IRS disclosed information about approximately 47,000 taxpayers.

Judge Kollar-Kotelly said that policy violated a federal law that protects taxpayer information as well as the Administrative Procedure Act. Friday's order expands on an earlier decision that temporarily blocked the sharing of taxpayer data.

"This is an important win for millions of people in America whose information has been threatened by the Trump-Vance administration, and represents the first injunction against this unlawful data sharing," said Democracy Forward CEO Skye Perryman. "Paying your taxes does not forfeit your right to privacy."

Section 6103 of the federal tax code requires the IRS to keep individual taxpayer information confidential with certain limited exceptions, which includes law enforcement agencies "for investigation and prosecution of non-tax criminal laws" with approval from a court, according to the agency's website.

The IRS has allowed immigrants without legal status to file income tax returns with individual tax numbers, or ITINs. These immigrants contributed $25.7 billion in Social Security taxes using borrowed or fraudulent Social Security numbers, according to the Bipartisan Policy Center.

ABC News' Peter Charalambous contributed to this report.